Coromandel Engineering Company Ltd.
|BSE: 533167||Sector: Infrastructure|
|NSE: COROENGG||ISIN Code: INE312J01012|
|BSE 14:06 | 19 Jul||38.50||
|NSE 05:30 | 01 Jan||Coromandel Engineering Company Ltd|
Coromandel Engineering Company Ltd. (COROENGG) - Director Report
Company director report
Your Directors present herewith the 69th Annual Report of the Companytogether with the Audited Financial Statements for the year ended 31st March2017.
The performance of the Company for the year is summarized below:
(Rs. in Lakhs)
OPERATIONS AND PERFORMANCE
For the year under review Your Company achieved a gross income of ' 3204.43 lakhs andincurred a loss before tax of ' 743.86 lakhs as against the gross income of ' 12399.26lakhs and profit before tax of ' 68.94 lakhs for the previous year.
Your Company's operations during the year were impacted by reduced in flow of freshorders due to the continued slowdown in Greenfield/ Brownfield investment in customersegments where the Company is present. There was stiff competition in market place for thelimited orders available and due to very low prices offered by competitors Your Companywas able to secure major order only by the end of the year.
In addition there was pressure on liquidity front resulting from delayed payments bycustomers which in turn affected the pace of execution of the ongoing projects . In fewof the projects where work has been completed the customers delayed the payment due totheir funds position and this in turn had affected the cash flow of the Company.
The Company is continuing its efforts for securing fresh orders and improve thecollections from the market.
On the Property Development business Your Company had completed the handing over ofall the projects during the previous year and hence there was only marginal income of ' 8Lakhs during the year as against Rs. 6944 Lakhs in 2015-16 .
The depreciation for the year was at ' 389.55 lakhs as compared to ' 435.85 lakhs forthe previous year.
Due to lower volumes / revenue the PBIT for the year was at negative ' 426.70 lakhs ascompared to ' 769.81 lakhs during the previous year. However consequent to reducedaverage borrowings the Company could bring down the finance cost from ' 700.87 lakhs inthe previous year to ' 317.16 lakhs in the current year.
During the year Your Company utilised the existing Plant and Machinery and hence didnot incur any major capital expenditure.
Taking into account overall financial performance of the Company and the accumulatedlosses no dividend is considered for the financial year 2016-17.
The Company also has not transferred any amount to general reserve.
During the year the unclaimed dividend amounting to ' 43804/- pertaining to dividendfor the year ended 31st March 2009 was transferred to the Investor Education& Protection Fund. The company has uploaded the details relating to unclaimed dividendon its website for the benefit of its shareholders.
The paid up Equity share capital of the Company as on 31.03.2017 was ' 3323.36 lakhs.During the year under review the Company has not issued shares with differential votingrights nor granted stock options nor sweat equity shares. As on 31st March2017 Mr. M.M. Venkatachalam Chairman was holding 451610 equity shares of ' 10/- eachand Mr. M.A.M. Arunachalam Director was holding 361610 equity shares of ' 10/- each ofthe Company. The other Directors of the Company do not hold any shares in the Company.
The paid up Preference Share capital of the Company as on 31.03.2017 was '70000000/-. During the year with the consent of Cumulative Redeemable PreferenceShareholders(CRPS) the term of CRPS was extended by a further period of 3 years and thedate of redemption set as 22nd August 2019. The dividend payable on CRPS wasrevised to 6% p.a. with effect from 22nd August 2016 from the existing 7% p.a.since 13th November 2014.
DETAILS OF DEPOSITS
The Company has not accepted any Deposits covered under Section 73 of the CompaniesAct 2013 read with the Companies (Acceptance of Deposits) Rules 2014.
PARTICULARS OF LOANS / GUARANTEES GIVEN / INVESTMENTS MADE
The Company has not extended any loans guarantees nor made any investments coveredunder the provisions of Section 186 of the Companies Act 2013.
The Board of Directors have established a review and monitoring process with themanagement to ensure that the risks pertaining to the business are identified steps aretaken to manage and mitigate the same and periodical updates are discussed. The Board hadconstituted a Risk Management Committee details of the same and its terms of referenceare set out in the Corporate Governance Report forming part of the Board's Report.
DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS
In addition to the Internal Controls on Operations the Board has laid emphasis onadequate internal financial controls to ensure that the financial affairs of the Companyare carried out with due diligence. Apart from Internal Auditors who review all thefinancial transactions and operating systems the Company has also in place adequateInternal
Financial Controls with reference to Financial Statements . During the year suchcontrols were tested and no reportable material weaknesses in the design or operation wereobserved.
At the 68th Annual General Meeting held on 22nd July 2016 Mr.R. Surendran (DIN: 00010017) was appointed as an Independent Director with effect from 25thJanuary 2016 for a period of 5 years upto the conclusion of the 73rd AnnualGeneral Meeting to be held in the calendar year 2021 and he is not liable to retire byrotation. Mr. M.A.M. Arunachalam (DIN: 00202958) Director retired by rotation pursuantto Section 152(6) of the Companies Act 2013 and Article 93 of the Articles of Associationand was re-appointed as Director liable to retire by rotation.
RE-APPOINTMENT OF RETIRING DIRECTOR
Based on the recommendation of Nomination & Remuneration Committee and approval ofthe Board Ms. G. Jalaja Director (DIN: 00149278) who retires by rotation pursuant toSection 152(6) of the Companies Act 2013 and Article 93 of the Articles of Association atthe forth coming Annual General Meeting and being eligible offers herself forreappointment.
APPOINTMENT OF KEY MANAGERIAL PERSONNEL
During the year Mr. N. Velappan was re-appointed by the Board as Manager of theCompany and a Key Managerial Person from 01st May 2016 to 30thApril 2017 under Section 203 of the Companies Act 2013 which was approved by themembers at the 68th Annual General Meeting of the Company held on 22ndJuly2016. The Board has now extended the tenure of Mr. N. Velappan as Manager for the periodof 1 Year from 01st May 2017 to 30th April 2018 for which theapproval of members is being sought in the ensuing Annual General Meeting.
Consequent to the resignation of Mr. K. Ramakrishnan as Chief Financial Officer theBoard had appointed Mr. R. Narayanan as the Chief Financial Officer of the Company witheffect from 24th October 2016. He holds charge of this position in additionto his position as Company Secretary and Compliance Officer of the Company.
EVALUATION OF BOARD'S PERFORMANCE
As per the provisions of Section 134(3)(p) of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Board has carried out anannual performance evaluation of its own performance the directors individually as wellas evaluation of the working of its Audit Committee Nomination and RemunerationCommittee Risk Management Committee and Stakeholders Relationship Committee. The mannerin which the evaluation has been carried out is explained in the Corporate GovernanceReport.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
On their appointment Independent Directors are familiarized about the Company'sbusiness and operations. Interactions with senior executives are facilitated to gatherinsight specific to the Company's operations. Detailed presentations are made available toapprise about Company's history current business plan and strategies. As part of thefamiliarization programme a handbook is provided to all Directors including IndependentDirectors at the time of their appointment. The handbook provides a snapshot to theDirectors of their duties and responsibilities rights process of appointment andevaluation compensation Board and Committee procedures and expectation of variousstakeholders.
The details of familiarization programmes as above are also disclosed on the website ofthe Company at the link: http: //www.coromandelengg.com/Inv_ policies.html.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 (Act) stating that the IndependentDirectors of the Company met with the criteria of Independence laid down in Section 149(6)of the Act and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
Pursuant to Section 178(3) of the Companies Act 2013 the Board on the recommendationsof the Nomination and Remuneration Committee framed a policy for selection and appointmentof Directors Senior Management and other employees and their remuneration. The details ofthe Remuneration Policy are stated in the Corporate Governance Report.
NUMBER OF MEETINGS OF THE BOARD
During the financial year ended 31st March 2017 the Board had met five (5)times on 25th April 2016 22nd July 2016 24thOctober 2016 27th January 2017 and 21st March 2017. The AuditCommittee had also met on the same dates except on 21st March 2017. Thedetails of the said meetings are given in the Corporate Governance Report. The interveninggap between the meetings was within the period as prescribed under the Companies Act2013.
DIRECTOR'S RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors' make the following Statements in terms ofSection 134(3)(c) of the Companies Act 2013:
(a) that in the preparation of the annual financial statements for the year ended 31stMarch 2017 the applicable accounting standards have been followed along with properexplanations relating to material departures if any;
(b) that the Directors had selected such accounting policies as mentioned in Note No.25 of the Financial Statements and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the company as at 31st March 2017 and of the loss of the companyfor the year ended on that date;
(c) that the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the company and for preventing and detecting fraud andother irregularities;
(d) that the annual accounts for the year ended 31st March 2017 have beenprepared on a 'going concern' basis;
(e) that the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
(f) that the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
RELATED PARTY TRANSACTIONS
All transactions with Related Parties entered during the financial year were in theordinary course of business and on an arm's length basis. There were no materiallysignificant related party transactions made by the Company with Promoters Directors KeyManagerial Personnel or other designated persons which may have a potential conflict withthe interest of the Company at large. None of the Directors have any pecuniaryrelationship or transactions vis-a-vis the Company other than sitting fees andreimbursement of expenses incurred if any for attending the Board meeting.
The Related Party Transactions are placed before the Audit Committee for review andapproval as per the terms of the Policy for dealing with Related Parties. Prior omnibusapproval of the Audit Committee is obtained on a quarterly basis for transactions whichare foreseen and of repetitive nature. The statement containing the nature and value ofthe transactions entered into during the quarter is presented at every subsequent AuditCommittee meeting by the CFO for the review and approval by the Committee.
Further transactions proposed in subsequent quarter are also presented. Besides theRelated Party Transactions are also reviewed by the Board on an annual basis. The detailsof the Related Party Transactions are provided in the accompanying financial statements.There are no contracts or arrangements entered into with Related Parties during the yearended 31st March 2017 to be reported under section 188(1) of the CompaniesAct 2013. The policy on dealing with Related Parties as approved by the Board is uploadedand is available on the Company's website at the following link: http://www.coromandelengg.com/Inv_policies.html
The Company has devised a vigil mechanism in pursuance of theprovisions of Section 177(10) of the Companies Act 2013 for Directors and employees toreport genuine concerns or grievances to the Audit Committee in this regard and detailswhereof are available on the Company's website.
The said committee has been empowered and authorized to exercisepowers as entrusted under the provisions of Section 178 of the Companies Act 2013. TheCompany had laid out and following the policy on director's appointment and remunerationincluding criteria for determining qualifications positive attributes independence of adirector and other matters provided under sub section 3 of Section 178 of the CompaniesAct 2013.
This policy will apply to all projects/ programmes undertaken as partof the Company's Corporate Social Responsibility and will be developed reviewed andupdated periodically with reference to relevant changes in corporate governance Statutoryrequirements and sustainable and innovative practices. The policy will maintain complianceand alignment with the activities listed in Schedule VII and Section 135 of the CompaniesAct 2013 and the rules framed thereunder.
The CSR Policy of the Company is uploaded in the website of theCompany http://www . coromandelengg.com/Inv_policies.html.
REASON FOR NOT SPENDING ON CSR ACTIVITIES
Since the average of net profit earned by the Company in the preceding three financialyears is negative the Company was not required to spend on the CSR activities during thefinancial year 2016-17 .
SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
The company has not received any significant and material orders passed by theregulators or courts or tribunals impacting the going concern status and company'soperations in future.
The appointment of M/s. Sundaram & Srinivasan Chartered Accountants Chennaibearing Firm Registration No. 004207S as Statutory Auditors of the Company to hold officefrom the conclusion of 68th Annual General Meeting until the conclusion of 69thAnnual General Meeting was ratified by the members at 68th Annual GeneralMeeting of the Company. Due to the requirement of mandatory rotation of Auditors underCompanies Act 2013 M/s Sundaram and Srinivasan will vacate their office at theconclusion of 69th Annual General Meeting of the Company. The Board ofDirectors based on the recommendation of Audit Committee proposes the appointment ofM/s. CNGSN & Associates LLP holding Firm Registration No. 004915S as StatutoryAuditors of the Company to hold office from the conclusion of 69th AnnualGeneral Meeting until the conclusion of 74th Annual General Meeting subject toapproval of the appointment by the members at the 69th Annual General Meetingand ratification of the appointment by the members at every annual general meetingthereafter. M/s CNGSN & Associates LLP have confirmed their eligibility under Section141 of the Companies Act 2013 and the Rules framed there under for their appointment asAuditors of the Company. As required under Regulation 33 (1)(d) of the SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 the Auditors have alsoconfirmed that they hold a valid certificate issued by the Peer Review Board of theInstitute of Chartered Accountants of India.
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules 2014 Mr. N.V. Thanigaimani Cost Accountant(Membership No.15557) was appointed as Cost Auditor of the Company for the financial year2016-17. The remuneration payable to the cost auditor is required to be placed before theMembers in a general meeting for their ratification. Accordingly a resolution seekingratification for the remuneration payable to Mr. N.V. Thanigaimani is included at Item No4 of the Notice convening the Annual General Meeting.
The Company has appointed M/s RGN Price & Co. Chartered Accountants Chennai asinternal Auditors of the Company for the financial year 2017-18.
Pursuant to Section 204 of the Companies Act 2013 read with the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 the Company had appointed Mr. R.Sridharan of Messrs. R Sridharan and Associates Company Secretaries Chennai to undertakethe Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith.During the year under review there has been no qualification reservation or adverseremark or disclaimer in their report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report highlighting the business details isattached and forms part of this report.
CORPORATE GOVERNANCE REPORT
All material information was circulated to the directors before their meeting or placedat their meeting including minimum information required to be made available to the Boardas prescribed under Part A of Schedule II of Sub- Regulation 7 of Regulation 17 of theListing Regulations.
In terms of Regulation 34 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 a report on CorporateGovernance along with a Certificate from a Practicing Company Secretary confirming thecompliance with the conditions of Corporate Governance as stipulated under Part E ofSchedule V of Sub-Regulation 34(3) of the Listing Regulations is attached to this report.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place a prevention of Sexual Harassment and Grievance HandlingPolicy in line with the requirements of The Sexual Harassment of Women at theworkplace(Prevention Prohibition & Redressal) Act 2013.
Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary andtrainees) are covered under this policy.
The following is the summary of sexual harassment complaints received and disposed offduring the year 2016-17 :
No. of complaints received - Nil
No. of complaints disposed off - Not Applicable
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS ANDOUTGO
The Company does not have any commercial activity that calls for conservation of energyand/ or technology absorption attracting disclosure in pursuance of Rule 8(3) of theCompanies(Accounts) Rules 2014. During the year the Company did not have any foreignexchange earnings and outgo.
SHIFTING OF REGISTERED OFFICE:
The Company has shifted its Registered Office from 3rd Floor Parry HouseMoore Street Chennai - 600001 to 5th Floor Parry House Moore Street Chennai- 600001 effective from 1st September 2016.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the annual return in the prescribed formMGT-9 as per Section 92(3) of the Companies Act 2013 read with Rule 12 of the Companies(Management and Administration) Rules 2014 is annexed to and forms part of this Report.
PARTICULARS OF EMPLOYEES
The ratio of remuneration of each Director to the median of employees' remuneration asper Section 197(12) of the Companies Act 2013 and information relating to employees to bedisclosed under Rule 5 of the Companies (Appointment & Remuneration of ManagerialPersonnel) Rules 2014 is annexed to and forms part of this report.
LISTING OF SECURITIES IN STOCK EXCHANGES
The Company's Equity Shares are presently listed on BSE Ltd.
Your Company has been certified under ISO 9001:2008 for quality management system andBS OHSAS 18001:2007 for safety management system in design and establishment of propertydevelopment construction of residential commercial and industrial projects supportingservices like electrical mechanical and plumbing works.
Your Directors place on record their appreciation for the continued co-operationsupport and assistance extended to the Company by its Bankers Shareholders Government ofIndia and Government of Tamil Nadu.